Bacteria from the genera Bacillus and Clostridium produce unusually durable and long lived spores that are the infectious agent of Anthrax and Botulism, and which are assembled in the cytoplasm of another cell. This unique cell within a cell structure (the endospore) is produced by a phagocytosis-like process known as engulfment. During engulfment, the membrane of the larger mother cell migrates around the smaller forespore, until it is completely enclosed within the mother cell cytoplasm. Engulfment provides a dramatic example of the dynamic capabilities of the bacterial cell, but its mechanism remains unclear. We have developed new tools for the study of engulfment, membrane fusion and protein localization and identified mutants defective in these steps. The fusion defective mutant is defective in both the final step of engulfment and cell division, and affects a conserved protein also involved in the final stages of chromosome segregation. We suggest that these proteins coordinate chromosome segregation with the completion of cell division, to ensure that cell separation does not damage an incompletely segregated chromosome. We have also identified two mechanisms by which the membranes move around the forespore, one of which depends on the SpollD peptidoglycan hydrolase. We will take a combined cell biological, genetic and biochemical approach to study the spatial regulation of peptidoglycan hydrolysis, the protein-protein interactions that mediate engulfment, as well as to understand the mechanisms by which bacterial cells catalyze membrane fusion and are dynamically organized. Engulfment provides a dispensable system to study cell biological events that are essential for all bacteria, such as protein localization and membrane fusion. It also requires peptidoglycan hydrolases, which are found in all bacteria that synthesize peptidoglycan, and which are potentially lethal because their activity can result in cell lysis without strict spatial and temporal regulation. Indeed, the lethality of many commercial antibiotics requires these hydrolytic enzymes. Engulfment provides an ideal system for understanding how bacteria control these potentially lethal enzymes, which are attractive targets for novel antibiotics, and has the potential to identify new drug targets in proteins that remodel bacterial membranes or mediate localization of bacterial proteins.